In the context of COVID related disruptions in execution of contracts, it is generally said that the affected

party has recourse to either Section 32 ( Contingency Contract) or Section 56 (Agreement to do impossible
act ) of the Indian Contract Act. Section 32 is for those cases which have a Force Majeure or Adverse Material
Change or similar clause in the Contract. Section 56 is applicable to cases where the disruption takes place
dehors the contract.

There are many judgements which seem to state that all force majeure contractual clauses are covered under
section 32. In a recent landmarkjudgement of the Supreme Court, Justice R.F. Nariman opined that if the
event which frustrates the contract is expressly or impliedly mentioned in a clause of the contract, Section 32
of the Act is applicable and if such conditions are not stipulated in the contract, then Section 56 of the Act is
applicable to declare the contract as frustrated.

My submission is that Section 32 deals with contingency contracts where the conditions (or contingencies)
don't qualify the existence of the contract, but qualify only the duty of immediate performance under it.
Section 32 talks about triggering the performance of an executory Contract on happening or not happening
of an event, but in context of COVID, the Contracts affected are the already performing contracts, which are
now facing disruption due to a force majeure event! Their essential character is different!

Contingency contracts are executory contracts. But absolute contracts which may be also executory are not
usually tied to a condition for performance. There may be conditions inserted in the contract which may
trigger commencement of a particular activity, e.g. payment of initial advance to commence site
mobilization. But that doesn't convert an absolute contract into a contingent contract as the condition is not
collateral, but only a part of the main consideration! If the payment is not made, the affected party may not
be obliged to perform and may have a right to be compensated for a breach of the Contract!

An absolute contract may be executory but its existence and performance doesn't depend on the future
happening or not happening of a condition or a contingency. It may be a condition in the contract that a
performance can be refused by either party ( and the Contract may be terminated) if there is an event of
bankruptcy of the other party, but that doesn't make it a contingency contract under Section 32 although the
condition is collateral to the Contract..

A contract may be substantially complete before a force majeure event happens and on the continuation of
the Force Majeure situation, the parties may earn a right to terminate and may not render any further
performance!. However, a Contingency Contract remains executory without any performance till the future
event happens or doesn't happen! Section 32 says Contingent contracts to do or not to do anything if an
uncertain future event happens cannot be enforced by law unless and untill that event has happened. If the
event becomes impossible such contracts become void.

Application of Section 32 in context of Force Majeure may be perhaps explained by deeming the Force
Majeure clause constituting a special Contingency Contract within the main Contract which may be at any
stage of execution. This special Contingency Contract which can be related to the performance after
occurence of a Force Majeure event remains executory till a Force Majeure event happens and only then the
related rights can be enforced. The promise of not demanding performance which is contingent upon the
occurrence of the event is activated and Section 32 is in operation. But isn't it too convoluted a way to tag
this Force Majeure provision to Section 32?

The contingency or the condition in a Contingency Contract is the pivot around which the Contract is
structured. The happening or not happening of the contingency triggers the performance and decides the
outcome of the Contract! The definition of a Contingency Contract under Section 32 does not envisage
contracts where the obligation to perform ( to do or not to do) is extinguished on the happening or the not
happening of an event.

The Force Majeure clause is not the mainstay of a regular absolute Contract. A regular Supply or Service
Contract is an agreement for a positive performance to do a certain work. The performance starts
immediately though its progress may be linked to various conditions which are not collateral, but part of the
main contract! For example, while actual work progress may be linked to progressive payments, and
persistent failure to make payment may even give a right to terminate the contract or treat the Contract as
discharged, such payment plans donot give it the color of a Contingency Contract Nobody plans execution of
a contract solely hinged to a force majeure clause. During the life time of a contract, many events may
happen and some of them may give a right to a party to consider the contract discharged, but that does not
change the essential character of the contract from an absolute one to a contingent one! In any case, neither
Section 32 nor Section 56 covers delay on account of a supervening situation. Section 56 completely
extinguishes or discharges the impossible to perform Contract by making it void!

In my humble view, connecting the Force Majeure clause to Section 32 will be a forced appropriation of a
mere contractual provision into the Act. If force majeure leads to impossibility of performance, those
situations are covered under Section 56. The basic question is that whether we need to link every contractual
right to a particular section under the Act? In my view, not every condition in a contract needs to have a force
to be sourced from the Act. Unless a provision under an agreement is positively illegal or prohibited under
the act, the provision being part of a lawfully executed agreement has the full force of law and need not be
tied forcefully to a particular section under the Act. If the contract includes a provision of Force Majeure
where the performance is excused on the occurrence of a Force Majeure event and during its continuation,
this agreement itself has sufficient legal force and doesn't need a specific cover under the Act!

Finally, we must acknowledge that the Indian Contract Act, 1872 is not a complete code dealing with all
branches of the law of contract.